Onward – the independent, not-for-profit thinktank – has published a new policy paper on the private rented sector in England that argues for a new route to homeownership for private renters and greater incentives for landlords.
The paper suggests that Ministers should give Britain’s private renters a new Chance to Buy their rented home by rewarding landlords who sell to long-term tenants.
Under Onward’s proposals:
- Existing buy-to-let properties would be eligible for 100% capital gains tax relief if the property is sold to a sitting tenant who has lived there for 3 years or more.
- The gain from this tax relief would be split evenly between the landlord and the tenant, giving the landlord a windfall when they sell and the tenant thousands of pounds towards their mortgage deposit.
- The Treasury should pay for this policy by tightening other tax reliefs for buy-to-let investors, including reducing the Private Residence Relief period from 18 months to 6 months and abolishing Lettings Relief of up to £40,000.
Onward estimates that 88,000 households would take up the relief each year – equating to nearly half a million households benefitting over 5 years. Allowing for multiple-person households, this would support the transition of a million people from the private rented sector into home ownership by 2023.
The report comes amidst growing political interest in the changing nature of Britain’s private rented sector, with Ministers recently consulting on proposals to bring in mandatory three-year tenancies.